I like Mxy's depiction, and I think as frightening as it might be, the more charming Silver Age elements haven't been compromised. Nothing that happened in this issue contradicts what we learned from Mxy in Dini's backup story.
You could also argue that Mxy is so aware that he knows Superman will come out on top, which would only reinforce his conviction that it's all a game. He's just playing his part, whether that be mischievous imp or sympathetic villain.